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Wachovia to cut off mortgage brokers

July 22, 2008|From Bloomberg News

Wachovia Corp., will stop accepting home loans made by mortgage brokers as it struggles with the fallout from its 2006 acquisition of Golden West Financial Corp.

The move by the fourth-largest U.S. bank in terms of assets takes effect Friday, said spokesman Don Vecchiarello.

About 40% of Wachovia's home-loan volume in 2007 was made through third parties such as mortgage brokers.

The Charlotte, N.C.-based company will continue to make loans through its offices.

Wachovia said last month that it would no longer offer option adjustable-rate mortgages, which allow payments of less than the interest accrued in the early years of the loan. Such loans were the principal product of Golden West. Wachovia paid $24 billion for the Oakland-based lender, which held $120 billion in option ARMs, which are much riskier than fixed-rate loans.

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